India: Data Protection In India

The 21st century has been described as the 'information
age' due to the extensive use of information and almost
everyone is constantly connected to the internet. The analysis of
large and complex sets of data has become a specialized science
called 'Big Data' analytics providing never before insights
to alleviate societal problems relating to areas such as health,
food security, transport and urban planning. Governments of the day
are launching specialised programmes focused on this digital
revolution, like the one launched by the Government of India called
'Digital India' initiative.

Both the public and the private sector are engaged in amassing
personal data which seems to be generated ceaselessly. While there
are justifiable uses that are vastly beneficial, such
centralization of data, profiling of individuals and increased
surveillance, has led to concerns relating to erosion of privacy of
individuals, ability to impact public decision-making process and
national security.

Various countries have been over the years trying to formulate
strategies to counter or control the negative affects of this
digital aggregation. The EU has adopted a rights-based approach to
privacy where personal privacy of an individual is the central
pillar of the protection regime. The US being a laissez faire
culture, has mainly focused on individual's right to be
left alone by the State and thus the legislations have been
regarding personal information being processed by the government,
where processing of personal information by the private sector has
been left open through a notice and choice model. China on the
other hand has adopted a centrally dominant model where personal
information has been perimetered within the country through
legislation on grounds of national security.

Existing data protection framework in India

In India too the digital era has triggered concerns about data
protection. For mitigating against privacy concerns and national
security concerns, the Indian legislature and governments have over
the years passed some specific laws in this regard:

It may appear that the aforesaid data protection regime in India
is similar in scope to the US data protection regime as it is
applicable to specific sectors with a target audience. Having said
that, the core differentiator is the fact that in the US the data
protection laws are focused on 'protection from the State'
and mostly do not have an application relative to the private
sector, while in India, such a distinction is not present and the
principle driver seems to be protection of data
simpliciter being equally applicable to public and private
sector.

Need for revamping the data protection framework in India

While the aforesaid specific legislations exist, the complexity,
dynamism and all-encompassing reach of the digital revolution
require a far more comprehensive regulatory regime to mitigate the
concerns that are ever present.

Essentially, it appears that there were three main drivers for
revamping the existing data protection framework in India:

Justice Puttuswamy judgment: A nine -judge
bench of the Supreme Court of India delivered a landmark judgment
in the case of Justice K.S. Puttaswamy (Retd.) v.
Union of India & Ors. 2017 (10) SCALE 1, wherein it
was held that the right to privacy is an intrinsic part of the
fundamental right to life and personal liberty under Article 21 (in
particular and in all fundamental rights in Part III which protect
freedoms in general) of the Constitution of India. It was held that
the Constitution of India must evolve with the circumstances of
time to meet the challenges thrown up in a democratic order
governed by the rule of law and that the interpretation of the
Constitution of India cannot be frozen on the perspectives present
when it was adopted. The Supreme Court acknowledged that the
concept of the right to privacy has evolved from the basic right to
be let alone, to a range of negative and positive rights. The Court
recognised 'informational privacy' as an important aspect
of the right to privacy that can be claimed against state and
non-state actors, but such a right is not an absolute right and may
be subject to reasonable restrictions. Further, the Court has laid
down a test to limit the possibility of the State clamping down on
the right, i.e., such an action must be sanctioned by law, it must
be necessary to fulfil a legitimate aim of the State, the extent of
the State interference must be 'proportionate to the need for
such interference' and there must be procedural safeguards to
prevent the State from abusing its power.

State's duty to protect
national security: India is a vast country with multiple
cultures, religions and linguistic diversity and such diversity
presents its own challenges for the State. This is further
complicated by its geo-political location, due to which India has
ranked third on the list of countries suffering from terror
attacks. For tackling the internal and external security
challenges, the State necessarily needs to have the ability to
engage in real-time surveillance of its data subjects if the need
arises. For such surveillance to be effective, the State must have
the ability to access the data centres, however, in today's
digital world, the physical site of the data may be outside
India.

India's prowess in IT
enabled services: India had a 55% share of the US$185-190
billion global outsourcing business in FY18. With the advent of the
General Data Protection Regulation in the EU w.e.f. May 25, 2018,
transfer of data from the EU to another non-EU country will need to
pass either (i) the adequacy test, or (ii) be in accordance with
standard contractual clauses offering enough safeguards in relation
with the data. Although, the transfer of data from EU nations at
present is being undertaken under the standard contractual clauses,
due to the sheer size of economic activity and the pervading global
protectionist environment, a view may be taken that India's
data protection regime is not in sync with the EU requirements
despite the contractual clauses being in place citing difficulty in
enforcing the contractual clauses in absence of a regulatory
framework. This threat is mitigated if India fulfils the adequacy
test, i.e., India has adequate level of data protection framework
in place. For this test, the European Commission will examine the
data protection rules in place in India, data protection rights and
their effective administration, data protection authority, powers
vested with such authority, international commitments with regard
to data protection and a periodic review of the aforesaid criteria.
In the present list of countries determined to be
'adequate', India does not figure, however, countries like
Argentina, Canada, Israel, Isle of Man, New Zealand and the United
States have been determined as 'adequate'. Accordingly, it
may be strategically prudent for India to bring its own regulatory
framework on data protection in line with the EU (which has been
trail-blazing the global data protection practices).

Proposed data protection framework for India

The Government of India constituted a committee, chaired by
Justice Srikrishna (retired), Supreme Court of India in August 2017
to design and draft data protection laws for India. The committee
after a year of deliberations and public consultations has released
a draft bill titled 'The Personal Data Protection Bill,
2018' (Draft Bill). The Draft Bill will now be
discussed in both houses of the Parliament of India before it is
passed and adopted with modifications as deemed fit.

Salient features of the Draft Bill have been set out below:

Data
principal

Only natural persons (not restricted to Indian citizens)

Data
fiduciary

Private entity or public entity or individual who determines
the purpose and means of processing of personal data

Data
processor

Private entity or public entity or individual who processes
personal data on behalf of data fiduciary (not an employee of data
fiduciary)

Two types of
personal data

'Personal Data' and 'Sensitive Personal
Data'

Personal Data has been defined to mean data relating to natural
person, who is directly or indirectly identifiable, having regard
to any characteristic, trait, attribute or any other feature of the
identity of such natural person

To data fiduciary or data processor in relation with personal
data (not applicable on anonymised data or non-personal data)

Territoriality

Extra-territorial in operation and is not restricted to Indian
entities

Test is 'connection with any business carried on in
India' or 'systematic activity of offering goods or
services to data principals within India' or 'connection
with activity which involves profiling of data principals within
India'

Exemptions

Security of the State; Prevention, detection, investigation and
prosecution of contraventions of law; Processing for legal
proceedings; Research, archiving or statistical purposes; Personal
or domestic purposes; Journalistic purposes; Manual processing by
small entities have been exempted from the application of the Draft
Bill

Personal data other than critical data may be transferred
outside India on the basis of approved contractual clauses or to
countries approved by the Indian regulator

Data protection
authority

Dedicated regulatory authority to be established to monitor
implementation of the data protection obligations

Remedies

Heavy penalties extending up to INR15 Crores (approximately USD
2,143,000) or 4% of total worldwide turnover of preceding FY

Transitional
provisions

Notified data to be within 12 months from the date of
enactment

Most provisions to be in force within 18 months from the
notified date

The Draft Bill when implemented will require the enterprises to
revisit their policies regarding data protection and processing.
But most importantly, enterprises will be required to revisit their
IT design and infrastructure to comply with the requirements of the
Draft Bill, which will lead to significant increase in cost of
doing business in India. It is estimated that data protection
regimes will dampen the gross domestic product of the nation where
being implemented by a significant percentage.

Implementation of the new framework on data protection is
already a necessity because the ball has been set rolling by the
EU, however, a balance needs to be achieved in protecting privacy
without throttling the economic juices. It is thus suggested that
in addition to laying out the theoretical framework, the regulatory
authorities, should also actively engage with various OEMs and
technical solution providers to make available off-the-shelf
solutions for enterprises, big and small, so that the
implementation is not challenging and cost efficient.

* For a critical review of the Draft Bill and the key challenges
that it may face, please stay tuned for Part 2 of this article.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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Data Protection refers to the set of privacy laws, policies and procedures that aim to minimise intrusion into one's privacy caused by the collection, storage and dissemination of personal data. Personal data generally refers to the information or data which relate to a person who can be identified from that information or data whether collected by any Government or any private organization or an agency.

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